Nationwide’s vanishing insurance commercial shows a boulder turned into a small pebble. The image helps car insurance buyers think that a burden, such as car insurance rates, can be minimized with the vanishing insurance strategy.

For each year the insured doesn’t have an accident, the insurance company reduces the deductible by a certain amount. After several years, the policyholder may qualify for zero deductible car insurance without an increase in car insurance rates.

According to the Nationwide website, the company takes $100 off upon enrollment in the disappearing deductible program.

If the insured avoids a moving violation or car accident (and subsequent car insurance claim) for the contract year, Nationwide decreases the deductible by $100. The deductible is part of the co-payment the insured agrees to make in the event of a car insurance claim.

Why do insurance companies offer vanishing deductible car insurance?

Good drivers interested in vanishing deductible car insurance hope to reduce their deductible to zero over time.

In the event of a car insurance claim, the policyholder with a zero deductible makes no co-payment.

According to calls made to both The Hartford and Nationwide, vanishing deductible car insurance does cost more than traditional car insurance.

The Hartford offers the disappearing deductible car insurance products to its “Advantage Plus” policyholders. The cost of Advantage Plus is approximately five percent more than traditional car insurance from the company.

Nationwide offers vanishing deductible insurance for approximately $60 per year to car insurance policyholders (for a single vehicle). Additional vehicles may be added to the policy for $10 each.

If you’re involved in a car accident as a disappearing deductible policyholder, your deductible rate returns to the original level.

Then, to become reinstated in the disappearing deductible program, the insured must remain accident- and violation-free for three years. Unfortunately, The Hartford doesn’t distinguish between an at-fault and a non at-fault accident claim.

Policyholders of Nationwide return to the $100 reduction in deductible when they make a car insurance claim.

Is the cost of a disappearing deductible car insurance plan worth it?

The cost of these disappearing deductible plans does add up over time.

With the Nationwide Insurance plan, after five years of no accident claims the policyholder’s deductible is reduced by $500, but that policyholder has ended up paying $300 or more depending on their number of cars enrolled in the program.

With The Hartford, the percentage increase can add up to an extra $80 on the policyholder’s car insurance premium each year.

Even though with The Hartford plan the policyholder can eventually have no deductible at all, that extra amount on their premium adds up each year.

Do the economics of vanishing deductible car insurance make good financial sense?

The average car insurance policyholder pays about $1,400 plus a year for car insurance.

Paying an incremental premium for an unused car insurance deductible benefit may not make good financial sense to you.

If you’re an accident-free driver, saving money on your car insurance rates is possible. Your clean driving record, paired with other attractive financial fundamentals like good credit, can save you money on car insurance.

Comparing car insurance rates by requesting car insurance quotes at least once per year is one of the best ways to save money on car insurance.

Alternatively, raising your deductible rate could make sound financial sense. If you’re driving an older vehicle and have a solid driving record for at least five years, raising your deductible can save you approximately 15 percent on car insurance rates.

In other cases, paying higher car insurance rates can be a good move. If your cash flow isn’t reliable, paying a higher out-of-pocket deductible in the event of a car insurance claim can add financial stress.

The best way to determine whether or not vanishing deductible car insurance works for you is to discuss the idea with your financial advisor.

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